Tag Archives: Social Security

Heads Up Items: Infrastructure, ALEC, Social Security, Financial Reform

Jig Saw Puzzle

There are items which don’t lend themselves to a full blog post, but are of immediate interest. Here’s a sampling:

#1. ALEC may be down to nine big corporate sponsors, but that doesn’t mean it doesn’t have a full agenda for its 2015 legislative season.  Watch for bills, often crafted from ALEC ‘models,’ on pre-empting efforts to increase the minimum wage. depriving low wage workers of health insurance, deregulating electronic cigarettes, protesting global taxes on tobacco, regulating ride share companies, lowering certification standards for dental practitioners, limiting the ability of individuals or businesses to dispute a denied property insurance claim, and school privatization.

#2. We’d probably ought to be watching the state of pipeline infrastructure in this country.  The current pipelines are aging, and some were constructed during the 1950s when low frequency electric resistance welds were popular – these welds are failing.  There’s more information from Inside Climate News, and from the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration reports.

#3.  There are inklings that the Republicans in Congress are planning to turn discussions of Social Security into an Annual Crisis – such as they’ve done with debates about the budget deficit and the national debt.  The process is almost an art form: Declare a CRISIS; mount a full-on publicity campaign complete with constant press releases, comments from members of Congress, and pundits on television; ignore factual refutation and information; then use the CRISIS to leverage concessions from the Democrats.

#4. Expect the Republicans in Congress to step up their attacks on the financial reform regulations enacted in the Dodd-Frank Act.  For some excellent background information see the conversation between Bill Moyers and Simon JohnsonSalon also has a piece on the same subject, and the New York Times weighs in as well.  If you missed these, it might be a good idea to have a click and read.

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Filed under Economy, financial regulation, Infrastructure, Social Security

Day One: Attack Social Security

Social Security Wall St card After less than one full working day, the Republican controlled House of Representatives pulled a fast one, a move that places Social Security in jeopardy. [TPM]

“Included in a new set of rules passed by the House of Representatives on Tuesday was a new measure making it more difficult to move funds between separate accounts maintained by the Social Security Administration. A seemingly technical provision on the surface, critics says it puts millions of disabled and elderly Americans at risk and sets the stage for further attacks aimed at the wider program.” [CD]

Representative Dina Titus (D-NV1) voted against this ploy; Representatives Heck (R-NV3), Amodei (R-NV2), and Cresent Hardy (R-Bundy Ranch) voted in favor of the new rules. [rc6]  And, what would the “seemingly technical provision” do?

“This House Rules change would allow a 20% benefit cut for millions of disabled Americans unless there are broader Social Security benefit cuts or tax increases improving the solvency of the combined trust funds.  It is difficult to believe that there is any purpose to this unprecedented change to House Rules other than to cut benefits for Americans who have worked hard all their lives, paid into Social Security, and rely on their Social Security benefits, including Disability, in order to survive.” [NCPSSM]

And, here they go again, “We have to cut Social Security in order to save it” one of the more antique lines in the GOP repertory.   The CBPP has another take on the situation created by the new rules:

“Its drafters state that the rule “would protect the Old-Age and Survivors Insurance (OASI) Trust Fund from diversion of its funds to finance a broken Disability Insurance system.” But DI — a vital part of Social Security — isn’t broken. Its recent growth stems primarily from well-understood demographic and program factors, chiefly the aging of the baby boom into their 50s and 60s, the growth of women’s role in the labor market and hence their eligibility for DI, and the rise in Social Security’s full retirement age. And the Social Security trustees have long anticipated the need to replenish the fund in 2016.”  [CBPP]

See, they – the Republican leadership – is going to “save” one trust fund by slashing another one!  Except that’s really not necessary.  In fact, the Republicans ignored one very obvious fix:

“A modest and temporary reallocation of part of the 6.2 percent Social Security tax rate to the DI Trust Fund would put the entire Social Security program on an equal footing, with all benefits payable at least until 2033.” [NCPSSM]

However, had they done this rather easy bit of legislating then later on it would be more difficult to demand harsh new eligibility requirements, or to advocate reductions in benefits.

Someone is betting that American voters can’t find the FAQ section of the Social Security Administration’s web page?  If the FAQ part doesn’t answer questions about eligibility and benefits, and more data is of interest, it doesn’t take much effort to find the Research, Statistics, and Analysis section.  From thence it’s an easy hop to the annual report.

The bottom line is that the “new Rule” makes it more difficult to shore up benefits for the 965,190 people who receive assistance because of disabilities under Social Security guidelines.  The largest number of these beneficiaries, both men and women, fall into the “Musculoskeletal system and connective tissue” category.  Translation: Have you lost two limbs? Have you lost a limb and a prosthetic device cannot work for you? Have permanent joint problems which make it impossible for you to work? Paralyzed? [DBH]   According to the 2013 report there are 324,881 persons in the U.S. who qualify for benefits in this category.

There is a persistent whine from the right wing – which also keeps repeating the evident falsehood that Social Security is driving the national debt – that Americans are “gaming the disability system” – and yes, you guessed it, There Are Takers Out There Getting Your Hard-Earned Tax Dollar. [Forbes]

The opponents of Social Security decry the “relaxation” of benefit eligibility for the disabled. Those “musculoskeletal/connective tissue” disorders are “exploding,” they say.  What these critics don’t say much about are the standards for evaluating a disabling condition in this category:

“For most musculoskeletal conditions, you will need to show that you have been treated by a doctor. Medical imaging (X ray, CAT scan, MRI, etc.) is generally accepted as one form of proof of the disability. Depending on the type of musculoskeletal condition, you may also have to undergo a battery of physical tests.

“Many types of musculoskeletal conditions improve with time. In order to qualify for Social Security disability benefits, you will need to demonstrate that your disability has lasted or is expected to last twelve months or more. It’s important that those who are claiming disability benefits due to musculoskeletal conditions to continue seeing their doctors. The SSA will consider whether you have been following prescribed treatments and whether they have had an impact on your condition.” [DBH] (emphasis added)

Notice that the ‘burden of proof’ remains on the applicant, and that the gratuitous allegation that the moochers are making things up because they have an OWIE is on shaky ground if that “battery of physical tests” and other “forms of proof” are taken into consideration.  Doesn’t sound much like a “weak system which invites abuse” after one reads the actual evaluation standards.

Another element left untouched by Social Security critics who have convinced themselves that the beneficiaries of disability funds are moochers is the Inspector General in the Social Security Administration.  This would be the same Inspector General who issues period reports to Congress. Had any of the Congressmen read the latest report they would have discovered some good news.

“Work CDRs for Disabled Title II Beneficiaries with Earnings, in which we estimated that almost 120,000 disabled beneficiaries received $1.02 billion they were not eligible for, due to their work activity. SSA had identified approximately $872.58 million of these overpayments, but had not detected $146.43 million. We estimate that, as of April 2014, SSA recovered about $489.37 million in overpayments.” (pdf)

Yes, there were over-payments, however, of the $1.02B over-payments, the SSA spotted $872.58M, and so far has recovered $489.37M in FY2013.  If the critics were truly interested in assisting the SSA in its efforts to reduce over-payments, or fraudulent payments, then the obvious way to go about that would be to appropriate additional funds for inspection, evaluation, and recovery action.  One sure way to create opportunities for fraud and abuse is to under-fund the agency in question, (then complain loudly that they must be incompetent because they didn’t catch all the fraudsters,) without hiring the additional personnel or improving information systems which would lead to earlier discovery and the reduction of case backlogs.

The IG evaluated 63,210 allegations of overpayment/fraud; opened investigations on 4,147 of them; closed 4,266 investigations; yielding 270 arrests, 613 indictments, 707 convictions, and 242 civil actions or civil monetary penalties. The other bit of good news is that of the 965,190 disability beneficiaries the IG’s Cooperative Disability Investigations found only 1,952 cases of “confirmed fraud.”  Putting these numbers into the Plastic Brains yields a confirmed fraud rate of 0.002022 – or o.2%. [IG SSA pdf]

Given these numbers the critics of the Disability benefits can’t argue (1) the system if rife with fraudsters, or (2) that the system is “unsustainable,” so they’ve settled on (3) the system is “too generous.”

I’m personally not sure what it takes to countenance a 20% cut in benefits for those least able to work — unless American workers pay more in payroll taxes, or agree to lesser benefits.  A simple, temporary, 6.2% payroll tax re-allocation would have balanced the scales until 2033.  However, that wouldn’t satisfy the likes of Heck, Amodei, and Hardy, and their GOP colleagues in the House – they’ll likely continue to spout variations on the “We had to destroy the village in order to save it,” until they’ve created a situation in which Social Security can be privatized.

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Heck Dancing On The Third Rail

Joe HeckRep. Joe Heck (R-TeaParty Darling) appears to be dancing as fast as he can, perhaps to the memorable Fred Ebb lyrics of “Razzle Dazzle,” (Chicago):

Give ’em the old razzle dazzle
Razzle Dazzle ’em
Give ’em an act with lots of flash in it
And the reaction will be passionate
Give ’em the old hocus pocus
Bead and feather ’em
How can they see with sequins in their eyes?

Representative Heck was once wont to flash the old “Social Security is a Pyramid Scheme” line [Politico June 2011] only to tap dance in the other direction tweeting to Jon Ralston, “Those who have followed my position know that I am fully committed to protecting the promise of Social Security.” [link]  The old Razzle Dazzle is altogether more difficult in an age of video-tape, audio recordings, and on-line news clips.

Razzle Dazzle: “Those who have followed my position…”  Those who have attempted to follow the Representative’s position may very well be those who have standing appointments with their chiropractor.

Flash: “I am fully committed to protecting the promise…” Note the carefully selected word “promise,” not necessarily the Social Security program as currently configured.  The promise of Social Security is simply that there will be a safety net income insurance program in place to prevent elders from falling into abject poverty.

Hocus Pocus:   First, let’s drop the first batch of sequins from the eye mask — the Social Security program, is NOT a pyramid scheme.  This is a Pyramid Scheme:

“As its name indicates, the pyramid scheme is structured like a pyramid. It starts with one person – the initial recruiter – who is on top, at the apex of the pyramid. This person recruits a second person, who is required to “invest” $100 which is paid to the initial recruiter. In order to make his or her money back, the new recruit must recruit more people under him or her, each of whom will also have to invest $100. If the recruit gets 10 more people to invest, this person will make $900 with just a $100 investment.”

“The fraud lies in the fact that it is impossible for the cycle to sustain itself, so people will lose their money somewhere down the line. Those who are most vulnerable are those towards the bottom of the pyramid, where it becomes impossible to recruit the number of people required to pay off the previous layer of recruiters. This kind of fraud is illegal in the Unites States and most countries throughout the world. It is estimated that 90% of people who get involved in a pyramid scheme will lose their money.” [Investopedia]

These scams show up in e-mail chains, old fashioned chain letters, and in acquaintance or affiliation frauds.   There really is no comparison between the illegal pyramid scams and an income insurance program like Social Security. To conflate the two is simply to admit ignorance of both.

The charge that Social Security is a Ponzi Scheme, a variation on a pyramid scam, is to conflate assured income with investment.

In a Ponzi Scheme investors are lured into investing in a scheme without being assured of how the returns on the investment plan will be generated.  The most common structure is that the “returns” are merely taken from more recent investors.  Ah ha! The detractors now claim that Social Security must be a Ponzi Scheme because older workers are receiving benefits paid for by younger ones.   No. All that’s required to dismiss this bit of Hocus Pocus is to understand what a Ponzi Scheme does, and why they all tend to fail rather rapidly.  No, Social Security is NOT like a Ponzi Scheme.   Kevin Drum explained this rather neatly in September, 2011.

Without the Hocus Pocus:  Social Security is supported by taxes.  The taxes (payroll taxes) are collected — the Social Security beneficiaries are paid, and the trick is to balance the revenues from the taxes with the benefits paid out.  To conflate an investment plan with a subsidized social safety net program is to misunderstand both.

Hocus Pocus, Shezzadaaaa — It’s out of balance! It’s Going Broke! There will be Nothing, Nothing I Say, for our Grandchildren…. Not so fast.

“The good news is that the Social Security trust fund is going to have a surplus until the year 2033, give or take, at which point there will still be enough money to pay 75 percent of promised benefits, according to the latest trustees’ report, an annual opportunity for the financial press and haters of our major social benefit programs to do the Panic Dance. Meanwhile, Medicare’s trust fund is going to have a surplus until the year 2024, more or less, at which point there will still be enough money to pay out 87 percent of benefits.” [HuffPo]

There is no reason for the Razzle Dazzle or the Hocus Pocus — let the sequins scatter to the floor — Social Security is not broke, it’s not a pyramid scheme, not a Ponzi Scam, and there’s no reason for the Panic Dance.

If we want to make the program more secure, there’s a reasonably simple way to do it.  Heck opponent, Erin Bilbray, nails it [Sebelius] — simply increase the current cap on Social Security tax collections.

Employees — the Social Security tax rate is 6.2 percent on income under $113,700 through the end of 2013. The Medicare tax rate is 1.45 percent of all income;   Employers — the Social Security tax rate is 6.2 percent. The Medicare tax rate is 1.45 percent; and  Self-employed —the Social Security tax rate is 12.4 percent on income under $113,700 through the end of 2013. The Medicare tax rate is 2.9 percent.  [SSA]

Translation: Every dollar earned over $113,700 is Social Security Tax Free.  The individual earning $113,700 annually is paying the same Social Security taxes as the person earning $1,137,000 or $11,370,000.  Want more revenue? Raise the cap.   Or, as candidate Bilbray explains:

“I will not support any plan to privatize Social Security and Medicare. I believe we cannot fix our fiscal problems on the backs of our retirees. Congress needs to address the deficit and spending by eliminating corporate tax loopholes, cutting spending, cracking down on waste and fraud, and tightening our belts. It is not right to ask Americans who have paid into a system their entire lives to sacrifice before Congress takes these issues seriously.”  [Bilbray]

No hocus pocus on Social Security there, no dancing on the Third Rail.

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Filed under Economy, Heck, Nevada politics, Politics, Republicans, Social Security

Roundup Day

Cattle Roundup** Still not convinced the Republican Party has shifted into the progeny of the 19th century “Native American Party?”  Yet another example of the Know-Nothing-ism comes to us from Minden, NV and Republican Assemblyman Jim Wheeler.  The bottom line:  “There are transcendent moral laws that cannot be changed by public opinion, and to fail to stand for these is to descend into moral idiocy and cowardice that makes a person unworthy of representing anyone.”  Go Here for the background, and video.  Wheeler’s feeble response here.

** Vegas Jessie takes a look at one particularly virulent form of ultra-conservatism, the Dominionists among the Republican ranks.

** And, the Ultra’s are heading in the same old direction they’ve been taking since 1935 — straight for Social Security.  Blue Lyon has thoughts on the matter worth a click and read.

** One of these days we’ll need to discuss why it is that rape isn’t universally condemned as a c-r-i-m-e.  The Sin City Siren speaks to the issue.

** The Nevada Progressive observes the devolution of the GOP position on comprehensive immigration reform in the form of Senator Marco Rubio’s latest attempt to placate the Know Nothings, and wonders just where Congressman Joe Heck (R-NV3) might be on the issue now.

** Speaking of comprehensive immigration reform.  On June 27, 2013 at 4:11 pm Eastern, the Senate passed S. 744, a comprehensive immigration policy reform bill.  Absolutely nothing has happened in the Beyond Do Nothing House of Representatives about this bill.  If the House were inclined to take up the issue there’s H.R. 15 available for their perusal.  What do we hear from the House of No? Nothing.

** There seem to be just about as many glitches in the discussion of the Affordable Care Act as there are in the web site, this post neatly takes down one of the newer GOP complaints. Recommended reading.   To which Perrspectives comments upon the CBS news warning that the ACA Medicaid enrollment is proceeding as planned.  Think Progress takes on the “sticker shock” issue.

** Feeling philosophical? There’s food for thought from Demos on the survival of the Social Darwinists in America. Also recommended reading.

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Filed under Health Care, Nativism, Nevada politics, Politics, Republicans

Are We Serious About Discussing The National Debt?

OK, let’s talk about the debt and the deficit — but let’s have a serious, adult, conversation.  Here are some suggested rules for this road:

We need to talk about our national debt as a fiscal policy matter, not as a political propaganda talking point.

#1. One of the crucial points we need to acknowledge is that we were involved in two very expensive wars between 2000 and 2013.  We racked up some significant debt during military operations in Afghanistan and Iraq.   The military endeavors in Afghanistan have been, and continue to be, exceedingly expensive:

“The fact remains, however, that if the CRS and OMB figures for FY2001-FY2013 that follow are totaled for all direct spending on the war, they reach $641.7 billion, of which $198.2 billion – or over 30% – will be spent in FY2012 and FY2013. This is an incredible amount of money to have spent with so few controls, so few plans, so little auditing, and almost no credible measures of effectiveness.” [CSIS]

The removal of American forces from Afghanistan will curtail future expenditures, but the debt remains.  Whether we like it or not, we have to pay for both the direct expenditures for military operations, and we have to allocate funds for indirect costs which we may reasonably expect to incur.  There will be Veteran’s benefits to distribute, survivors’ benefits, and other VA services.

Although we are no longer a significant military presence in Iraq, the debt for our military actions and “reconstruction” is still on the books.  As of March 2013, the Iraq war cost $1.7 trillion which should be added to another $490 billion in benefits owed to Iraq War Veterans. [Reuters]

However convenient it may be to run on about “out of control” and “rampant” spending — it is absolutely necessary to be honest about the major elements included in the total indebtedness — and we cannot honestly discuss our national debt without acknowledging its major components, such as the wars in Afghanistan and Iraq.

At some point the national discussion must answer the question: How do we pay down what we owe for these wars without jeopardizing the promises we made to the men and women we sent to fight in them?

Secondly, we need to address the issue raised in the CSIS report, i.e. how we account for and administer our military expenditures?  There have been several attempts to improve Pentagon auditing, but the situation remains alarming.  The Defense Contract Auditing Agency, which is supposed to prevent over-payments, fraud, and abuse is in disarray.

The DCAA has a budget of $573 million, and a backlog of 24,000 audits.  This means that at the rate it is operating it cannot clear its backlog until 2016.  [BusinessIns] Note, it isn’t that the Pentagon doesn’t want to audit its contracts, it is that with current personnel and resources — it can’t.   Audits in 2011 (the last year for which figures are available) the DCAA recouped about 9% of the $128 billion in costs  it audited.   If we apply the 9% rate to the current backlog of $574 billion we could expect to recoup some $54 billion. [BusinessIns]

Therefore, another question we need to raise when discussing “waste, fraud, and abuse” in a significant portion of our national expenditures is:  Have we allocated the resources necessary to perform the audits imperative to the reduction of wastefulness?  It makes precious little sense to argue for either a reduction or increase in allocations to the Department of Defense unless we are willing to provide the necessary fiscal oversight of those allocations.

#2.  There needs to be an agreement as to what does and does not contribute to national indebtedness, especially in terms of earned benefit programs.

First, while we may argue about the philosophy underpinning the Social Security program, there is no argument about how it is funded.   The Social Security Administration explains why some have been confused about the “debts owed to the SSA”:

Most likely this question comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the “unified budget.” This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are “on-budget.” This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken “off-budget.” This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are “on-budget” or “off-budget” is primarily a question of accounting practices–it has no effect on the actual operations of the Trust Fund itself.  [SSA] (emphasis added)

From 1984 onward the Social Security Administration was empowered to hold special issue securities which are non-public securities, not available on the commercial market, that can be redeemed as the SSA determines it needs in order to make its revenues meet the amount of benefits to be paid.  In short, it was the Reagan Administration’s intent that there be a “savings account for the trust funds” to address the retirement of the Baby-Boomers, and the increased number of beneficiaries who would be eligible for benefits.

While it might be advisable to decrease the need for the Social Security Administration to dip into its Special Issue reserves, it cannot be rationally argued that the SSA contributes in any significant way to the national debt.

There are alternatives to decreasing benefits, the most common being an increase in the earnings cap.  The current contribution and benefit base is set at $113,700 meaning that all income above that level is not subject to taxation.  [SSA]

“Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year.” [NYT] (emphasis added)

When the Congressional Budget Office released its report on Social Security in July 2010 (pdf) altogether too many focused on the problems sections and insufficient attention was paid to the options the report presented.  There was, for example, Option 6, removing the cap:

Under this option, Social Security’s total revenues would increase by about 0.9 percentage points of GDP in 2040, or by about 18 percent relative to current law. This option would improve the 75 year actuarial balance by 0.9 percentage points of GDP and would extend the trust fund exhaustion date beyond the 75 year projection period. As a result, payable benefits would be higher from 2039 onward, especially for people born later. This option would primarily affect taxes paid by high earners. (emphasis added)

When we discuss options regarding the “reform” of earned benefits (“entitlements” if you will) ALL the options should be on the table — including the removal of the regressive cap on income subject to the Social Security taxes.   [See also NYT]

There’s nothing intrinsically wrong with discussing “entitlement reform” as part of future budget and funding planning.  However, there is something very wrong about assuming that all such ‘reform’ be borne by the 95% of the U.S. population who are to accept reduced benefits,  for the benefit of the top 5% of income earners.  A person earning an adjusted income of $1,000,000 annually isn’t paying any Social Security tax on $886,300 of his or her income; the equivalent of 16 people who earn the U.S. median wage of $54,000.

Those wishing a fuller account of the elite assault on earned benefits should read, or review, Thomas B. Edsall’s excellent commentary in “The War on Entitlements,” NYT, March 6, 2013.

#3. We need to factor in the impact of the recession.   There’s really no way around this:

“Including all the stimulus spending, tax cuts, bank bailouts and automatic stabilizers, the Great Recession will add about $4.2 trillion to the federal deficit by the time the economy has fully recovered in 2016, based on back-of-the envelope calculations using figures from the Congressional Budget Office and the congressional Joint Tax Committee.”  [MarketWatch]

Or we could review the report from the Dallas Federal Reserve, and the Recession looks even worse if we look at total costs to the overall economy : “Last month, the Federal Reserve Bank of Dallas published a staff paper estimating the costs of the 2007-2009 financial crisis. The conservative estimate came out at 40 to 90 per cent of 2007 output, roughly US$6 to US$14 trillion.” [INET]

Recessions reduce income, reduced income reduces tax collections, reduced tax collections reduce government revenue, reduced government revenue increases debt.

If “tax reform” is advocated as a way to recoup the losses from the Great Recession, then we need to move beyond the Supply Side Hoax.   The notion that lower taxation would lead to more government revenue, was then — and is now — a theory in search of reality.    From the “been there, done that” corner:

“Supply-side economics starts from the generally accepted economic insight that tax policy can influence private-sector decisions by changing the incentives to work and invest. But supply-side acolytes take this relatively mundane observation to an extreme conclusion. They argue that lowering taxes for people, especially for those who have a lot of money to invest, will always lead to better economic results, and furthermore, that lower taxes is the single most critical intervention the government can undertake to stimulate growth.

This assertion—that lower taxes for the rich will lead to improved economic results—is testable. Of course, pure natural experiments in economics are few and far between, but over the last 30 years the United States alternated between economic policies that were heavily influenced by supply-side ideas, then were not, then were again. This variation allows us to compare economic performance in the various eras. If proponents of supply-side theory are correct, then the supply-side eras should outperform the non-supply side era. But that’s not what happened.” [CAP]

Reduced to a single chart we can see the results of the Supply Side Hoax applied to the U.S. public debt.

Supply Side TrendsWhen we apply Supply Side policies the blue line (national debt) increases, when we don’t the national debt is reduced.

It would follow from this that the “No New Taxes” (aka Supply Side Mantra) line makes a lovely and enticing slogan, but the application of the policy hasn’t resulted in better levels of investment growth, significant gains in productivity, better overall economic growth, better employment numbers, more income for the middle class, or better wages for working Americans.  These are all associated with increased federal revenue levels, we would obviously benefit from adopting a more realistic pro-growth tax policy than simply adhering to the narrow “no taxes = pro-growth” incantations from the Supply Siders.

When the push runs into the shove, a discussion of tax policy in regard to the reduction of the national debt should realistically incorporate the means why which federal revenues can be increased, without exacerbating the already serious level of income inequality, stagnating wages and salaries, and burdens on the American middle class.

If we’re truly serious about discussing the means by which we are to address the level of the national debt, then pontificating and nibbling around the edges of the 15% of the Federal Budget which concerns non-defense discretionary spending doesn’t suffice.   Are the advocates of cutting the food assistance programs really trying to convince us that they are taking important steps to curtail federal spending when those programs comprise some 0.24% of the federal budget? [InteractiveCP]

There are, indeed, some very serious questions to be answered when the question of the National Debt is raised: Not is sound bites and slogans, but in sound economic thinking and earnest efforts on behalf of working Americans.

 

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Pushing Their Buttons: Then and Now

Socialism Buttons

Watching the Republicans marching carefully in the footprints of their fore-bearers makes for interesting television, and bad governance.   It doesn’t appear to matter to the Anti-New Dealers still among us that Social Security (and cuts thereto) is the Third Rail of American politics, and it’s instructive that the Tea Party Lady held up her sign reading: “Keep the Government Out of My Medicare.”    Their logic is simplicity itself: If it’s about the collective welfare of the United States and its citizens it’s Socialism.  If it’s Socialism then it must be Anti-American.

100% Americanism

Return with us now to the Red Scare — not the McCarthy Era, the first Red Scare.  The groundwork was laid by George Creel, President Wilson’s chairman of the United States Committee on Public Information, who was tasked with encouraging a reluctant nation into World War I.  [PBS] Americans were listening to the Four Minute Men in their movie theaters, some 7,555,190 speeches between April 1917 and November 1918.  They read some 6,000 press releases, and perhaps saw about 200,000 slide shows.  [SW] The Chambers of Commerce were recruited to help distribute the materials, as well as the Boy Scouts and various fraternal societies.  All the speeches, press releases, periodicals, and propagandizing had one point: Hate The Hun.

And then the war ended.  The Russian regime crumbled, and the Communists installed a new government. In the U.S. returning soldiers had trouble finding work, farmers who had been encouraged to plant fence to fence during the war found themselves with surplus crops and declining prices.   During this unstable period Theodore Roosevelt, Jr. and other interested officers formed the American Legion at the “Paris Caucus.” Subsequent organization of the modern version of the Grand Army of the Republic, lead to the adoption of its promotion of 100% Americanism at its 1919 convention.  The events in Centralia, Washington, November 1919, helped change the conversation.

The Centralia American Legion organized a parade for Armistice Day 1919, while members of the IWW worried that their headquarters were going to be raided, as had been the case with other IWW offices since August 1917.  There continues to be controversy about who shot first, who shot whom, and why anyone was shooting at all, but the result was that four people were dead, and the American Legion’s notion of 100% Americanism was attached in popular imagination with anti-IWW sentiment.  In this milieu it didn’t take too much imagination to substitute “Bolsheviks” for “Huns,” and associate Labor with Bolsheviks.  1920 was a turbulent time, with Red Hunting Results:

As a result of the strikes and unrest, the strikers were branded as “Reds” and as being unpatriotic.  Fear of strikes leading to a Communist revolution spread throughout the country.   Hysteria took hold.  “Red hunting” became the national obsession.  Colleges were deemed to be hotbeds of Bolshevism, and professors were labeled as radicals.  The hunt reached down to public secondary schools where many teachers were fired for current or prior membership in even the most mildly of leftist organizations. [UMKC]

That some opinion leaders tried to differentiate between socialism and communism didn’t substantially alter the ideological landscape or still some of the more radical rhetoric.   Anarchy, socialism, communism, even support for organized labor was “Left” and bad, conservatism and the “Right” was 100% American.

Fast forward to the late 20th century, after the enactment of Social Security and Medicare, and we have Rand Paul, then of  Kentucky Taxpayers United, explaining why Social Security is a Ponzi Scheme and Medicare is … (you guessed it) … Socialism. [TPM]

Privatization

Since there are 57,469,232 Social Security beneficiaries as of June 2013, of whom 40,298,999 are retired persons, 6,216,500 are survivors, and 10,953,733 are disabled individuals and their dependents [SSA] it’s no longer politically expedient to speak of repealing Social Security.   The modern opponents instead talk about privatizing the system.  Their “free market” solution to a non-existent problem involves transforming the Social Security program into “private individual accounts” to be invested in Wall Street.   Failing that, the opponents would like very much to have access to the Special Issue securities, which are held in the Social Security Trust Funds and are currently not available to the public.

The last serious attempt at Privatization came in President George W. Bush’s February 5, 2005 State of the Union speech the details of which changed as the President was buffeted by political winds.  The final gasps included private accounts, reduced benefits, clawback provisions, and limited investment in unspecified index funds. [CAP] By the end of 2005 the President’s proposal was DOA.   In fact, as of March 2005 about 58% of our “100% Americans” were opposed to the proposal.  [WaPo]

The privatization of Medicare isn’t meeting with much more enthusiasm, polling conducted in 2011  found 58% of Americans opposed the GOP plan to replace the Medicare program with private health policies for seniors  subsidized with coupons from the federal government.  [TPR]

In short, when faced with a choice of privatization or the “socialism” of the Social Security and Medicare, the American public prefers a little “socialism” in its political mix.

And now we come to the third button.

Republicans did a good job of associating the provisions of the “Obamacare” law with socialism, but perhaps not so much when the actual name of the law is put forward.  A Kaiser Family Foundation tracking poll in March 2013 found a majority favorable rating for the major elements of the Affordable Care Act, except for the individual mandate.   In short, people liked the tax credits for small business owners, closing the infamous dough-nut hole in Medicare Part D, creating insurance exchanges or marketplaces, extending coverage for dependents, subsidy assistance for those purchasing health care insurance, expanding Medicaid, etc… they liked the parts but not the demagogued whole.

The irony is that a minority in the House of Representatives, still held in thrall by the antiquated sloganeering of the early 20th century anti-Left siren songs, could bring down the economic system they purport to espouse — turning their paeans into a eulogy for the free market system.

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There They Go Again!

EisenhowerThe rhetoric surrounding the federal shut down because the House Republicans want to re-write history isn’t all that different from the hyperbole applied to the enactment of the Social Security Act in 1935. Here’s a taste:

 “This bill opens the door and invites the entrance into the political field of a power so vast, so powerful as to threaten the integrity of our institutions and to pull the pillars of the temple down upon the heads of our descendants.” Rep. James W. Wadsworth (R-NY) following a Ways and Means Committee vote, April 19, 1935

“Never in the history of the world has any measure been brought in here so insidiously designed so as to prevent business recovery, to enslave workers, and to prevent any possibility of the employers providing work for the people.” Rep. John Taber (R-NY) April 19, 1935

The Chamber of Commerce entered the fray with this timeless piece:

In other countries, the problem is handled by taking the necessary sum each year from the current taxes. Otherwise the load would get so big as to be a menace. On the other hand, if industry is burdened with too heavy taxes, the result may be more unemployment in the future, killing the goose that lays the golden eggs.  Harper Sibley, incoming president of the Chamber of Commerce, May 4, 1935

Really? Social Security was enacted into law, which didn’t prevent Americans from inventing and manufacturing Tupperware (1946), waterproof diapers (1946), transistors (1947), acrylic paint (1947), hand dryers (1948), felt tip marking pens (1953), zipper plastic storage bags (1954), videotape (1956), air-bubble packaging (1957), integrated circuits (1958), global satellite navigation systems (1960), computer mouse (1963), cordless telephones (1965), personal computers (1971).  [source]

President Dwight D. Eisenhower had this to say about Social Security in this prescient comment from 1954:

“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”  — Dwight Eisenhower in a letter to his brother Edgar, November 8, 1954

Plus ça change, plus c’est la même chose?

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Filed under Economy, Politics, Republicans